The fast-fashion group is still growing, but weaker US sales, rising fulfilment costs and unresolved investigations are placing its low-price model under closer scrutiny.
Shein is advancing towards a Hong Kong initial public offering after publishing a draft listing document that reveals mounting regulatory and trade pressures across its two largest markets. China’s securities regulator completed the required overseas-listing filing on July 10, while the application proof appeared on the Hong Kong exchange later in July. Final pricing, fundraising and listing dates have not been confirmed.
Tariffs weaken the US engine
Shein’s net revenue rose only 1.1% year on year to $9.1 billion during the first quarter of 2026. US revenue fell 14.3% to $2 billion after the removal of duty-free de minimis treatment and the imposition of additional tariffs on China-origin goods. The United States generated around 24% of Shein’s revenue in 2025.
The company says applicable taxes on China-origin products shipped to the US now range from 10% to 87.5%. It has raised prices, introduced formal customs-clearance procedures and expanded localised inventory and fulfilment. Fulfilment expenses increased 12.8% to $4.32 billion in the quarter, rising from 42.8% to 47.7% of revenue.
Investigations widen the risk register
Shein disclosed that the US Federal Trade Commission is investigating its American operations. The company is cooperating and said a settlement could require significant payments, although the investigation’s scope and outcome remain uncertain.
The European Commission separately opened Digital Services Act proceedings concerning alleged addictive platform design, recommender-system transparency and controls against illegal products. Europe accounted for roughly one-third of Shein’s revenue in 2025 and early 2026.
Growth comes at a higher cost
Operating income fell from $348 million to $258 million in the first quarter. Shein recorded a $99 million net loss, mainly because of a $328 million fair-value charge on preferred shares.
For apparel suppliers, the IPO underscores a shift towards stricter documentation, origin verification and shorter, localised fulfilment models. Investors will now judge whether Shein can preserve affordability and demand while absorbing duties, compliance costs and greater legal exposure.
